MPC Meeting: Pressure Mounts on CBN to Avoid Another Rate Hike

As the Central Bank of Nigeria’s Monetary Policy Committee (MPC) begins its crucial 305th scheduled for scheduled for May 19 and 20, 2026, pressure is mounting on the committee to resist another interest rate hike that businesses say could further cripple Nigeria’s struggling economy.

The CBN disclosed in its April 2026 Inflation Expectations Survey Report, released by its Statistics Department under the Economic Policy Directorate that 63.3 per cent of Nigerians want interest rates reduced ahead of the MPC decision.

The report found that most respondents preferred lower borrowing costs despite persistent inflationary pressures across the economy.

It stated, “The survey revealed high public engagement with CBN communications (92.1 per cent), a general perception of transparency (93.3 per cent), and a strong desire for a reduction in interest rates (63.3 per cent).”

According to the report, 26.0 per cent of respondents wanted interest rates retained at current levels, while 10.7 per cent supported a further rate hike.

Amidst this call, the Centre for the Promotion of Private Enterprise (CPPE), a leading private sector thinktank, has also issued a strong warning, arguing that the CBN risks worsening economic hardship by using high interest rates to fight an inflation crisis largely driven by supply shocks, rising energy costs, and political spending.

“The economy is already under severe strain. Another rate hike could choke investment, weaken manufacturers, hurt SMEs, and worsen job losses,” said Dr Muda Yusuf, Chief Executive Officer of the CPPE in a policy document made available to BUSINESS METRICS on Sunday.

The intervention comes amid growing fears that the MPC may either tighten rates further or maintain its current hawkish stance due to mounting inflationary pressures linked to geopolitical tensions in the Middle East, rising crude oil prices, and increasing election-related spending ahead of the 2027 political cycle.

According to the CPPE, Nigeria’s inflation problem is not being driven by excess consumer demand but by structural challenges including high energy costs, poor logistics, exchange rate instability, and weak domestic production capacity.

“Monetary tightening is effective for demand-driven inflation, but Nigeria’s inflation is largely cost-push and supply-side induced,” the group stated.

“Raising rates under current conditions would amount to punishing the productive sector for problems it did not create,” it cautioned.

The group also pointed to fresh liquidity injections into the economy through higher FAAC allocations to states and rising political expenditures, warning that while these may concern the MPC, aggressive tightening would do little to solve the root causes of inflation.

Instead, the thinktank urged the government and the CBN to focus on fixing supply-side bottlenecks, including energy security, food supply chains, transportation infrastructure, domestic refining capacity, and trade facilitation.

“Lasting disinflation will come from productivity growth and improved economic fundamentals, not from crushing businesses with expensive credit,” Dr Yusuf said.

The MPC is expected to announce its decision later this week, with businesses, investors, and households holding their breaths to see which side of the coin will land.